Obstacles to Firms’ Adoption of Socially Embedded Approaches to BoP Markets

Abstract

This chapter seeks to understand key obstacles to companies’ efforts at developing and implementing ‘base of the pyramid’ (BoP) strategies. Critical in companies’ efforts to service the BoP is the development of mutually beneficial relationships with the consumer base given that a high degree of social embeddedness fosters trust, knowledge-sharing and resource access between stakeholders. The chapter specifically explores case studies that exhibit socially embedded approaches of South African food companies with an existing BoP effort. Focus is on the need for learning and innovation; logistical challenges; BoP market risks; connecting with customers; financial constraints; and prevalent misconceptions. The research reinforces the view that initial models of BoP strategies underplayed the complexities involved in developing and implementing them. A number of constraints are identified, the detail and implications of which are often given relatively little attention, such as challenges related to crime, low levels of education, and the striking cultural and socio-economic distance between corporate employees and BoP consumers, as well as the already existing and increasing levels of competition in the BoP. A set of inter-relationships are identified and explained between these constraining factors, which ought to help managers develop a set of priorities with regard to strategic actions and timeframes. We conclude that the BoP discussion is moving on, at least among business decision-makers, from the question of whether there are business opportunities at the BoP, to the question of how best to identify and exploit them.